Overview
The week was light on economic indicators, and the key ones concerned the housing market. Both in construction and sales, the data pointed to a stronger market, although some of the growth in construction clearly resulted from warmer weather after a hit to January’s results due to winter weather.
Sales of existing homes
After falling in all but three months between early 2022 and the end of December 2023, sales of existing homes have logged solid gains so far in 2024. Sales of existing single-family homes jumped 10.3% m/m, seasonally adjusted, in February after rising 3.4% in January. Sales were down 2.7% y/y.
February’s m/m sales increase was the largest since February of last year, which also was the last month that saw a higher level of sales.
The National Association of Realtors said that additional housing supply is helping to satisfy market demand. However, due to the robust sales volume in February, the inventory of existing single-family homes on the market at the current sales rate declined to 2.8 months – the lowest since March 2023.
Improved supply might be helping sales, but affordability remains a hurdle. In addition to mortgage rates approaching 7%, the median price of an existing single-family home sold in February increased 1.5% after easing slightly for seven straight months.
EPA GHG rule
The White House Office of Management and Budget on March 15 cleared a final rule on phase 3 greenhouse gas (GHG) standards for medium- and heavy-duty commercial vehicles. EPA had proposed rules covering model years 2028 through 2032 as well as tightening of existing standards for MY 2027 for certain types of vehicles. Details of the final rule await EPA’s announcement of the rule, which could be within days.
Numerous stakeholders have objected to EPA’s proposal because, among other things, the agency has no authority to mandate the charging and fueling infrastructure needed to support zero-emissions vehicles (ZEVs) on a large scale. Truck manufacturers also objected to the proposed changes in the MY 2027 regulations, saying they depended on certainty in their engineering and development.
Even if the final rule proves less stringent than the proposal, the Biden administration clearly will face efforts to derail the regulations. Assuming the rule is published soon, it will be outside the time window for a new administration to simply withdraw it or for a new Congress to nullify it using the provisions of the Congressional Review Act.
One near-term option would be a resolution of congressional disapproval, but it would not succeed this year. Congress passed such a resolution to block implementation of the NOx rules on commercial trucks that were announced in December 2022. However, President Biden vetoed the bill, and there were not enough votes to override the veto.
Opponents of the EPA rule will have two options. One is a court challenge. The other would be to persuade a future administration to initiate a rulemaking to reverse the GHG standards.
Spot metrics
For the first time since mid-January, broker-posted spot rates in the Truckstop system rose for all equipment types during the week ended March 15 (week 11). The largest gain was in spot rates for refrigerated equipment, which rose in consecutive weeks for the first time in 2024. Flatbed rates have risen in all but three weeks this year, and dry van rates were up for the second time in three weeks.
For more on week 11 spot metrics for truck freight, visit https://freight.ftrintel.com/spotmarketinsights.
Rail/Intermodal
Last week was unusual for North American rail volume because carload traffic rose while intermodal traffic declined, albeit only slightly. Total carload volume increased 3.6% week-over-week (w/w), narrowly exceeding volume in the same 2023 week.
Economically sensitive freight rose 4% and was up by about that same percentage compared to the same 2023 week. Intermodal volume, meanwhile, eased 1% w/w but was more than 12% higher than the same week last year.
Through week 11, cumulative rail traffic is up 1.8% in 2024 solely due to the strength of intermodal, which was up 7.8%. Carload traffic was still down 3.7% y/y but is improving.
In the latest week, motor vehicles and parts joined chemicals and petroleum/petroleum products as commodities posting y/y gains on a cumulative basis. Cumulative metallic ores and metals volume is just barely below 2023 levels.
The biggest drags on carload volume continue to be coal and nonmetallic minerals, which are down nearly 13% and 8% y/y, respectively.
